U.S. top court signals support for corporate religious claims

WASHINGTON (Reuters) - The U.S. Supreme Court signaled on
Tuesday it may allow corporations to mount religious objections
to government action, possibly paving the way for companies to
avoid covering employees' birth control as required under
Obamacare.

During a 90-minute oral argument, 30 minutes more than
usual, a majority of the nine justices appeared ready to rule
that certain for-profit entities have the same religious rights
to object as individuals do. A ruling along those lines would
likely only apply to closely held companies.

As in most close cases of late, Justice Anthony Kennedy will
likely be the deciding vote. Based on his questions, it was
unclear whether the court would ultimately rule that the
companies had a right to an exemption from the contraception
provision of President Barack Obama's 2010 Affordable Care Act,
commonly known as Obamacare.

The dozens of companies involved in the litigation do not
all oppose every type of birth control. Some object only to
emergency contraceptive methods, such as the so-called
morning-after pill, which they view as akin to abortion.

The case marks the second time Obamacare has featured
prominently before the Supreme Court. In 2012, the court upheld
by a 5-4 vote the constitutionality of the act's core feature
requiring people to get health insurance.

Although the case has no bearing on the overall healthcare
law, it features its own volatile mix of religious rights and
reproductive rights. A capacity crowd filled the marble
courtroom, while outside hundreds of demonstrators, most of them
women, protested loudly in an early spring snowstorm.

The challengers are arts-and-crafts retailer Hobby Lobby
Stores Inc, run by evangelical Christians, and Conestoga Wood
Specialties, which is run by a Mennonite family. They sued under
a 1993 law called the Religious Freedom Restoration Act.

"We believe that Americans don't lose their religious
freedoms when they open a family business," Barbara Green, one
of Hobby Lobby's owners, told reporters after the hearing. "We
were encouraged by today's arguments."

'OUT OF THE WOODWORK'

Liberal-leaning justices and the government said that
allowing companies to make claims could lead to a swathe of
challenges to government regulations, from Social Security to
health coverage for immunizations.

"If your argument were adopted ... then you would see
religious objectors come out of the woodwork with respect to all
of these laws," Justice Elena Kagan told lawyer Paul Clement,
who argued before the court on behalf of the companies.

The conservative members of the court did not seem
convinced. Chief Justice John Roberts said the ruling could be
limited to closely held companies. That outcome would "avoid all
the problems" raised by the government concerning how to
determine if a company has a valid claim, such as a situation in
which some shareholders have religious objections but not
others, Roberts said.

His conservative colleagues, including Samuel Alito and
Kennedy, seemed to share that view.

"If you say they can't even get their day in court, you are
saying something pretty, pretty strong," Alito told Solicitor
General Donald Verrilli, the Obama administration's lawyer.

Kennedy hinted at his views in another exchange with
Verrilli over whether in a hypothetical situation a for-profit
corporation, such as a medical provider, would not be able to
object if the government required it to carry out abortions.

Verrilli told the justices that the court would be "skating
on thin constitutional ice" if the companies won an exemption
because of the impact it would have on women employees. That
view appeared to be shared by Kagan, one of three women on the
court. When an employer refuses to provide the coverage, a
female employee is "quite directly, quite tangibly harmed,"
Kagan said.

BIRTH CONTROL ISSUE

On the question of whether the companies can ultimately win
their claim on the birth control provision, Kennedy hinted at
some sympathy for the government. He wondered whether the
objecting companies might have alternative means to avoid
providing the coverage. Rather than face fines for not providing
the contraception coverage, might they instead be able to pay
employees more to buy their own health insurance, thereby
circumventing their religious objections?

"How is the employer hurt? He can just raise the wages,"
Kennedy asked Clement.

Kennedy was seizing on similar comments made by liberal
justices Sonia Sotomayor and Kagan. Kagan noted that if a
company were to drop its health insurance, it would face a
$2,000 per employee tax under Obamacare, which would cost
roughly the same as providing health insurance.

The 2012 case overshadowed the proceedings on several
occasions during the argument, with Kennedy, one of the justices
in the minority who voted to strike down the law, joking to
Verrilli, who won the earlier case, that perhaps the court
should take another look at the entire healthcare law.

"Well, I think it has been examined, your honor," Verrilli
said to laughter in the courtroom.

A short distance from the Supreme Court, Obamacare faced a
separate legal challenge, which, if it succeeds, would further
undermine the 2010 law considered to be the President's
signature domestic policy achievement.

A three-judge panel of the U.S. Court of Appeals for the
District of Columbia Circuit appeared divided as it heard
arguments from businesses in states with federally run health
insurance exchanges who said the government was overstepping the
authority of the law in providing subsidies on the exchange.